The third quarter of 2022 saw more consumers turning to unsecured
personal loans and credit cards as a means to help stave off the
financial pressures brought on by inflation. TransUnion’s (NYSE:
TRU) newly released Q3 2022 Quarterly Credit Industry Insights
Report (CIIR) also shows that while delinquencies for most credit
products remain in line with pre-pandemic levels, they continue to
rise from the very low levels seen in 2021, particularly among
subprime segments of customers.
“Consumers are being pressured on multiple fronts, first by this
environment of high inflation, and secondarily by the higher
interest rates that the Federal Reserve is implementing to tamp it
down. However, as long as employment numbers remain strong, there
should continue to be a steady flow of customers seeking access to
new credit products, credit cards and personal loans in particular,
and concurrently, an ample supply of lenders willing to offer
credit to them,” said Michele Raneri, vice president of U.S.
research and consulting at TransUnion. “Delinquencies remain in
line with historical levels for most credit products. However,
levels have been rising over the past year, particularly among
subprime consumer segments, and should be monitored in the coming
months to look for similar increases in other credit risk
tiers.”
Credit card balances continue to grow, with bankcard balances
reaching a record high of $866 billion in Q3 2022, which represents
a year-over-year (YoY) increase of 19%. This increase was heavily
driven by growth among Gen Z and Millennial borrowers, among whom
balances grew by 72% and 32%, respectively. Private label balances
are also at a record high, up 7.3% YoY. Private label total and
average credit lines have also increased to record highs, as have
average number of accounts per consumer. Delinquencies have also
risen and in Q3 2022 were slightly higher than the level seen
pre-pandemic in Q3 2019. Bankcard charge-offs, for now, continued
to decline, down for the sixth consecutive quarter. Charge-off
balances are showing an upward trend among private label after
seven consecutive quarterly declines.
Unsecured personal loans have seen record growth in originations
and balances in recent quarters. This growth has been fueled, in
part, by significant increases in lending to below prime risk
tiers. This increase, combined with a general deterioration in the
financial health of subprime consumers as a result of elevated
inflation, has led to an increase in delinquencies, which have now
surpassed pre-pandemic levels. As lenders navigate increasing
delinquencies, a high inflation environment, capital constraints,
and a potential recession, lending to below prime risk tiers is
likely to slow down in the last two quarters of 2022.
Loan Growth and Balances Rising for
Credit Cards and Unsecured Personal Loans
Key Metrics |
Q3 2022 |
Q3 2021 |
Number of Credit Cards |
510.9 million |
474.2 million |
Average Credit Card Debt per Borrower |
$5,474 |
$4,857 |
Consumers with Access to a Personal Loan |
22.0 million |
19.2 million |
Average Personal Loan Debt per Borrower |
$10,749 |
$9,387 |
TransUnion’s Credit Industry Indicator (CII) was relatively
stable between Q2 and Q3 2022, ticking up one point to 120, but
dropped from the prior year level of 126 in Q3 2021, largely driven
by the rising delinquencies across many product categories. The CII
is a quarterly measure of depersonalized and aggregated consumer
credit health trends that summarizes movements in credit demand,
credit supply, consumer credit behaviors and credit performance
metrics over time into a single indicator. Examples of data
elements categorized into these four pillars include: new product
openings, consumer credit scores, outstanding balances, payment
behaviors, and 100+ other variables.
To learn more about the latest consumer credit trends, register
for the Q3 2022 Quarterly Credit Industry Insights Report
Webinar. Read on for more specific insights about credit cards,
personal loans, auto loans and mortgages.
Largely driven by non-prime growth and a high inflation
environment, credit cards see highest balances on
record
Q3 2022 CIIR Credit Card Summary
Bankcard originations increased to 21.3 million in Q2 2022, a
10.7% growth YoY, with significant growth seen in the subprime
(+12.5%) and super prime (+15.2%) risk tier segments (originations
are viewed one quarter in arrears). Private label originations
increased to 12 million, with 8.4% growth YoY. The subprime share
of overall private label originations increased to 22.5%.
Total bankcard balances in Q3 2022 increased to a record level,
$866 billion, representing a 19% growth YoY, driven by card use
across all risk tiers and recent high origination growth in
non-prime segments. Total private label balances increased 7.3%
YoY, driven by subprime consumers, while average consumer balance
reached the highest point since 2Q 2020.
Total available bankcard credit lines and average credit lines
per consumer are at an all-time high, with consumers having access
to a record number of cards in their wallets, again driven by
growth in prime and below segments. The 90+ delinquency rate
increased to 1.94% in Q3 2022, which was slightly above the 1.82%
seen in Q3 2019. Private label 90+ DPD delinquency rate increased
56bps YoY to 1.52%. Total private label charge-off balances have
started showing an upward trend after a seven consecutive quarter
decline.
Instant Analysis
“In this inflationary environment, consumers are
increasingly turning to credit, as evidenced by the record total
bankcard balances this quarter. This is particularly true among the
subprime segment of consumers. Delinquencies are rising, which is
to be expected given the increase in consumers getting access to
credit, many for the first time. However, the numbers remain in
relative alignment with historical pre-pandemic levels of 2019. We
are likely to see continued growth in credit card usage as
increased interest rates and inflation continue to put pressure on
consumers while employment numbers remain strong.”
- Paul Siegfried, senior vice president
and credit card business leader at TransUnion
Q3 2022 Credit Card Trends
Credit Card Lending Metric |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Q3 2019 |
Number of Credit Cards |
510.9 million |
474.2 million |
451.9 million |
441.9 million |
Borrower-Level Delinquency Rate (90+ DPD) |
1.94% |
1.13% |
1.23% |
1.82% |
Average Debt Per Borrower |
$5,474 |
$4,857 |
$5,068 |
$5,658 |
Prior Quarter Originations* |
21.3 million |
19.3 million |
8.6 million |
16.5 million |
Average New Account Credit Lines* |
$5,021 |
$4,200 |
$4,001 |
$5,295 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.For more credit card industry information, click
here for episodes of Extra Credit: A Card and Banking Podcast by
TransUnion.
Personal loan consumers reach a record 22 million as
below prime balances continue to grow
Q3 2022 CIIR Personal Loan Summary
As of Q3 2022, 22 million consumers had an unsecured personal
loan, the highest number on record, highlighting the expanding
acceptance and usage of this product type by consumers.
Originations in Q2 2022 (viewed one quarter in arrears) grew 36%
YoY to reach six million, with all credit tiers experiencing 30%+
growth. Consequently, total personal loan balances in Q3 2022
continued to grow, reaching $210 billion – a 34% increase over last
year. Balances grew at a much higher rate for below prime risk
tiers (up 58%) compared to prime and above risk tiers (up 24%). As
subprime balances make up a larger and larger share of personal
loan balances, serious borrower delinquency (60+ days past due) has
continued to grow and now exceeds pre-pandemic levels –the borrower
delinquency rate stood at 3.89% as of Q3 2022, a YoY increase of
54% and the highest level since 2014.
Instant Analysis
“Lenders’ expansion into below prime risk tiers has been a key
driver of recent growth in unsecured personal loan originations.
Additionally, originated loan amounts and average consumer balances
have continued to increase, partially driven by higher prices. As
expected, increased lending to higher risk tiers drove increased
overall delinquency rates, with serious delinquencies now exceeding
pre-pandemic levels. As we look to the rest of 2022 and into next
year, lenders will likely shift their originations focus towards
prime and above credit risk tiers as they look to moderate risk in
their portfolios while continuing to grow.”
- Liz Pagel, senior vice president of consumer lending
at TransUnion
Q3 2022 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Q3 2019 |
Total Balances |
$210 billion |
$156 billion |
$148 billion |
$152 billion |
Number of Unsecured Personal Loans |
26.4 million |
21.6 million |
21.4 million |
22.5 million |
Number of Consumers with Unsecured Personal
Loans |
22.0 million |
19.2 million |
19.5 million |
20.2 million |
Borrower-Level Delinquency Rate (60+ DPD) |
3.89% |
2.52% |
2.55% |
3.30% |
Average Debt Per Borrower |
$10,749 |
$9,387 |
$8,864 |
$8,758 |
Prior Quarter Originations* |
6.0 million |
4.4 million |
2.6 million |
4.8 million |
Average Balance of New Unsecured Personal
Loans* |
$7,925 |
$7,168 |
$5,984 |
$6,292 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
As Mortgage Originations Decline, Consumer Interest in
Home Equity Lines and Loans Rises
Q3 2022 CIIR Mortgage Loan Summary
The slowdown in mortgage originations continued to accelerate in
Q2 2022, down 47% from Q2 2021. At the same time, originations
volume stood at 1.9 million, on par with Q2 2019 – which was part
of one of the best recent years of mortgage originations prior to
the pandemic. For the fifth consecutive quarter, in Q2 2022
purchases made up the bulk of total origination volume,
outnumbering refinance volume three to one for the quarter, with
the originations share up 24 percentage points from 53% in Q2 2021
to 77%. Purchase volumes decreased from 1.9 million in Q2 2021 to
1.5 million in Q2 2022 (down by 23% YoY) while refinance volumes
decreased from 1.7 million in Q2 2021 to 425,000 in Q2 2022 (down
by 74% YoY). The amount of equity that mortgage holders have
available to tap continued to grow, hitting an aggregate total of
$19.6 trillion in Q2 2022 (latest data available) and is up 22% YoY
and 63% over the last five years. Approximately 84 million
consumers have available equity in their homes, with a median
equity of $236K. Homeowners continue to tap that equity, with HELOC
and home equity loan originations increasing YoY by 47% and 43%,
respectively. The average credit line for new HELOCs is up 7% YoY
from $113K to $121K. While serious mortgage loan delinquencies
linger near record lows, after years of continued declines, this
has leveled out and has remained flat for the past year. Even with
low and stable mortgage delinquencies, the current macroeconomic
volatility means that lenders should continue to monitor their
portfolios for any changes in this trend.
Instant Analysis
“HELOCs and Home Equity Loans are growing at dramatically higher
rates than in recent years. Considering that homeowners had a
cumulative total of $604B in non-mortgage debt, these products are
attractive options for homeowners because they can use their
available home equity to pay off more expensive debt while keeping
their existing low interest rate mortgage in place, which can mean
saving money on a monthly basis. For example, if a homeowner has
$10,000 in credit card debt, by tapping their home equity to
consolidate that debt at the lower interest rate, they could save
around $700 a year. Lenders can benefit from this as well by adding
to their portfolios and realizing this cross-sell opportunity.
Lenders should utilize data and analytics from companies like
TransUnion to understand how much equity each homeowner has access
to, and create customized messages to educate individual consumers
on how tapping their home equity can benefit them.”
- Joe Mellman, senior vice president and mortgage
business leader at TransUnion
Q3 2022 Mortgage Trends
Mortgage Lending Metric |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Q3 2019 |
Number of Mortgage Loans |
52.2 million |
51.2 million |
50.7 million |
50.3 million |
Account-Level Delinquency Rate (90+ DPD) |
0.60% |
0.60% |
0.81% |
1.02% |
Prior Quarter Originations* |
1.9 million |
3.6 million |
3.3 million |
1.9 million |
Mortgage Origination* Distribution – Purchase |
77.4% |
53.2% |
42.9% |
71.9% |
Mortgage Origination* Distribution –
Refinance |
22.6% |
46.8% |
57.1% |
28.1% |
Average Balanceof New Mortgage
Loans* |
$345,557 |
$305,140 |
$293,731 |
$278,724 |
Number of HELOC Originations* |
409,110 |
278,029 |
261,143 |
309,104 |
Number of Home Equity Loan Originations* |
296,723 |
207,957 |
180,982 |
192,469 |
* Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional mortgage industry
metrics.
Auto originations down, delinquencies tick up as the
industry continues to recover from disruption
Q3 2022 CIIR Auto Loan Summary
Originations in Q2 2022 were down 14.9% YoY from Q2 2021, the
peak of the pandemic auto recovery. However, when compared to the
pre-pandemic Q2 2019, originations for Q2 2022 were down 4.1%. New
vehicle inventory shortages continue to be a factor driving down
originations, with super prime originations decreasing 18.5% YoY.
As a result, used vehicles made up the majority of vehicles
financed at 60%, up from 55% in Q2 2021. Despite some recent easing
in vehicle price gains, affordability remains a concern for
consumers as average amounts financed are up YoY, with new auto
loans increasing 12% to $40,906 and used up 17% to $28,072. Monthly
payments for new auto loans increased 13.7% to $679, while used
payments were up 16.1% YoY to $517. Total auto loan balances stood
at $1.49 Trillion in Q3 2022, up from $1.46 Trillion in Q2 2022.
Delinquency rates have risen over the past year, but the
performance of recent origination vintages remains in line with
that of originations in prior years. Point-in-time 60+dpd account
delinquency rates rose 22bps quarter-over-quarter to 1.65% in Q3
2022, up from 1.43% in Q2 2022. This increase is only slightly
higher than the typical seasonal increase of 9-19bps from Q2 to Q3
dating back to 2010.
Instant Analysis
“Supply chain challenges, while easing moderately in recent
months, continue to affect the auto industry. Furthermore,
inflation and rising interest rates have impacted consumer
affordability, particularly among lower priced vehicles, with the
trend of rising monthly payments continuing for both new and used
vehicles. While pre-2021 vintages generally remain in positive
equity positions, newer vintages face higher originating LTVs on
high-priced vehicles. Delinquencies are up, particularly among
subprime consumers, a trend which we expect to continue for the
immediate near-term. However, the overall delinquency rate remains
in relative alignment with historical norms.”
- Satyan Merchant, senior vice president and automotive
business leader at TransUnion
Q3 2022 Auto Loan Trends
Auto Lending Metric |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Q3 2019 |
Number of Auto Loans |
81.2 million |
83.1 million |
83.7 million |
83.4 million |
Account-Level Delinquency Rate (60+ DPD) |
1.65% |
1.20% |
1.27% |
1.20% |
Prior Quarter Originations* |
7.0 million |
8.2 million |
6.5 million |
7.3 million |
Prior Quarter Average Monthly Payment NEW** |
$679 |
$597 |
$579 |
$567 |
Prior Quarter Average Monthly Payment USED** |
$517 |
$445 |
$392 |
$389 |
Average Balance of New Auto
Loans* |
$29,169 |
$25,607 |
$23,839 |
$21,937 |
Average Debt Per Account |
$18,405 |
$16,892 |
$15,694 |
$15,232 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.**Data from S&P Global
MobilityAutoCreditInsight, viewed one quarter in arrears.Click here
for additional auto industry metrics.For more information about the
report, please register for the Q3 2022 Credit Industry
Insight Report webinar.
About TransUnion (NYSE: TRU)TransUnion is a
global information and insights company that makes trust possible
in the modern economy. We do this by providing an
actionable picture of each person so they can be reliably
represented in the marketplace. As a result, businesses and
consumers can transact with confidence and achieve great things. We
call this Information for Good®.
A leading presence in more than 30 countries across five
continents, TransUnion provides solutions that help create economic
opportunity, great experiences and personal empowerment for
hundreds of millions of people.
http://www.transunion.com/business
Contact |
Dave
Blumberg |
|
TransUnion |
|
|
E-mail |
dblumberg@transunion.com |
|
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Telephone |
312-972-6646 |
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